Human Resources Committee on May 26th, 2015

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Can you elaborate on some of the challenges you've faced trying to establish this structure in the west or all across Canada?

[Lars Boggild]

Yes, absolutely. I think I can add to that as well. I would say that a lot of the presentation regarding standard setting and those kinds of principle-based approaches to engagement is actually something we would probably be very much for, because one of the challenges often is actually seeing the clarity and consistency in working with public sector partners and knowing what their priorities are among the potentially competing priorities within these tools.

I'll just give some examples of that. You may very well prioritize knowledge creation, in which case having very rigorous evaluations that have more statistical significance, that require larger numbers may be a priority. Conversely, you may have a very high priority on value for money, in which case the focus really needs to be very much on variable costs, really focused on what kind of ramp-down of other services would need to take place to monetize savings. Those aren't always the same priorities and there's prioritization among them relatively. Having that clarity has certainly been a challenge, as well as getting folks past.... Especially since this is a new tool, sometimes there's been so much interest that there's a lack of clarity around issue selection at least for some of these first pilots, some of these first tools.

Justin, is there anything you'd like to add?

[The Chair, Conservative, Phil McColeman]

Actually, it's time. That comes to five minutes.

Perhaps in another round, Justin can give his response.

Mr. Cuzner.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

I would like to welcome everybody here, with a special welcome to Sally. The guys around the table would remember Jane Taber, a long-time fixture here on the Hill. Jane's pride and joy; I know she'd want you to do great things, so it's great to see you are doing great things here today.

[Sally Guy]

Thank you.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

What has evolved from the study so far? I guess I'll come back to Mr. Mulvale's comment about the cream skimming or the risk that we see in the low-hanging fruit. It's easy to go after the low-hanging fruit and certainly more of a challenge to go after the more complex issues in society through social financing. That's what I'm drawing from our study, from 36,000 feet, so far.

I like your response about making sure that in the governance models that are set up, a lot of it comes down to analysis and evaluation being key. I guess the government has to come with a core set of principles. From there on it's pretty much on an issue-by-issue basis that you would negotiate the governance and the criteria for analysis and the outcomes wished. It's really tough to have a template other than bringing those core set of principles to addressing an issue. Perhaps you could comment further on that.

Then probably you'll just have time to go back—either Sally or Mr. Mulvale—on the risk you see, or the fact that we can't solve all our problems with social financing models. The state still has a role to play, especially in very complex issues.

I'll just step back and let you go.

[Lars Boggild]

To speak to that briefly, I'd say we're actually very supportive of an approach that recognizes that there are essential services that this kind of experimentation may not be relevant for at all. I think of very essential services, like an emergency room delivery and things like that, just to lay that out clearly.

Equally, though, when we think about that principle setting, I think a critical aspect of that is your concerns around cream skimming, around that kind of cherry-picking. It has been a very conscious element of the design of these tools to address that concern, to mitigate that risk, to ensure that the evaluative measures and metrics actually directly incentivize the treatment of the hardest to treat individuals often. That can very much be done, just to say that. Equally, it's relevant to note that in coming forward with these principles, I think you're right that there's an aspect that each of these projects does require the negotiation of individual parameters, project by project.

However, it's also very relevant that, in some of the examples I use, such as the fair chance fund in the U.K., what they did there was, they said, “We are going to create a dedicated pool. This is exactly how we'll measure the outcomes related to that outcomes payment pool, and this is the kind of rate we'll pay towards those outcomes.” With that laid out, you actually get a lot of efficiency in terms of almost bulk contracting. It doesn't have to be one by one, but it does definitely require a lot of intentionality by government, and we're very supportive of government kind of sticking to that.

[Justin Bertagnolli]

I agree, and I'll just add quickly to that.

One of the important pieces is that—and I'm happy that James brought it up—I think there's a very strong moral and ethical dilemma here and that's around attacking the root causes and the focus there. That's one of the really important pieces of having some strong intermediation so that the intention of these projects is held to the utmost standard towards tackling the things that we actually are seeking to tackle, which will help mitigate some of the risks that the CASW has identified.

Obviously, there are fundamental principal differences that we share, but I think ultimately we share the goal of a stronger community in which we're tackling some of these hard-to-tackle challenges.

[The Chair, Conservative, Phil McColeman]

You have 15 seconds, Mr. Mulvale, for a quick response.

[James Mulvale]

One thing I worry about in terms of the social impact bond approach is something in social science that we call the Hawthorne effect, where the group that's being researched or investigated behaves in certain ways because of the fact that they're the focus of all this attention.

It's important to underline—and I haven't heard this today so far—that we do all kinds of research into effectiveness of service delivery now. We have randomized control trials and we have evidence-based research in social work and medicine in various fields. I guess one of the things I find missing from the social investment bond discourse is that we currently do have ways of measuring effectiveness of various kinds of services, and maybe the SIB approach is a bit of a distraction in some ways.

[The Chair, Conservative, Phil McColeman]

Okay.

Mr. Mayes, for five minutes, sir.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Thank you to the witnesses for being here today.

The issues around social services are quite broad, so I want to focus some of my thoughts, because I don't know if social finance fits all of the services that are provided.

One case, for instance, is the fact that the Government of Canada transfers moneys for youth skills training. That was not working well. The outcomes were not good and so, of course, we came out with our Canada skills funding and partnered with business, partnered with the provinces, and partnered, of course, with the federal government so we could have those outcomes.

I think one of the challenges we have in Canada is that we're such a large country. The regions are all different and the needs are different. It makes it difficult to really have a program that fits every province or every region. In saying all of this, I really agree with what Dean Mulvale said about making sure that we do have the outcomes, that the goals are met, and are met in a timely fashion.

Then there was an interesting thought from Lars that was a value-for-money lens, and I just thought right away, whose lens are you looking through? That's the challenge: what lens do we look through to evaluate value for money? Are we having successes in the programs that we are moving forward on? I'd like to ask how you see that framework and how we could provide a good way of evaluating the programs. As I say, there are some programs you just cannot include. They're ongoing. But I think taxpayers definitely need to see value for money and see outcomes.

Maybe I could turn that over to Madam Guy to give us some thoughts about that.

[Sally Guy]

Certainly. Thank you for the question.

I'll start with an anecdote that benchmarking and applying market logic or market rationale to social services can often put the client in a position they shouldn't be in. I was going to bring up, but you already brought it up, that we are very concerned about operating through a market- or a profit-focused lens as opposed to a client-focused lens.

One of my former supervisors said they've really had to cut back the fat at their job. She was working at mental health and addictions in New Brunswick, and was operating under new benchmarking systems that are really quite profit and fiscally driven. She was going from a system where she could holistically understand her clients, be around them in the community, and know when someone needed to come in twice in a week or know that she needed to see this person for 45 minutes instead of half an hour. When she was moved over to a system where being observed from the outside or from 36,000 feet, as Mr. Cuzner put it, it would look as though they were being quite successful, because she was seeing way more clients in a day in 30-minute intervals than she was before, but to her and her observation of the community it was not as successful.

In terms of creating those benchmarks you have to engage with the people who are being served, get that lived experience perspective as well as ask the front-line workers what those benchmarks should be, which is why we're so concerned about implementing even more of a market rationale into the provision of social services.

I won't go too long, but one of my colleagues put the social impact bonds in the example of payday loans. They might be exactly what you need up front; they might be that godsend, but then you get into that cycle of poverty. What saves you after you pay off that payday loan? You still don't have that job. You don't have that sustainable architecture around you to help prevent you from getting into the same position where you needed a payday loan in the first place.

We don't want the Government of Canada to get into a similar cycle where they're paying into these payday loans, taking out a loan, and then someone pulls out and they're left to pick up the pieces or to put into place again what had been put in or financed through a private corporation.

I hope that answers your question a little.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Mr. Boggild.

[Lars Boggild]

I would not like to be contrasted or compared to a payday lender. I don't think that's how we think about this at all.

Fundamentally, most of our clients are service delivery organizations. We designed this from their intentionality, with their perspectives at the table guiding the process from day one. Absolutely that is true.

From there when we think about whether or not the government is targeting savings, monetizable savings, or value for money, that decision, and it is a priority, there's a spectrum there, is in the court of government to decide.

Some SIBs have been designed with a very careful focus on exclusively variable costs. They had been driven by producing savings. There are also social impact bonds that have been driven and designed by social situations that haven't seen change in a long time. These issues have been stagnant, and we wished there was some kind of innovative capacity in that sector that these can drive.

As we think about that on-ramp and we think about the legacy of these tools, we think about that very consciously. We think there's a very strong role to say let's use these tools based on this standard, with these standards in place, but use it where we can see a bit of an on-ramp through that evidence-building process of policy change as well.

Things that work do grow in that respect.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Monsieur Brahmi.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Thank you, Mr. Chair.

My question is for Dr. Mulvale.

Two weeks ago, the committee heard from David Juppe, who is a senior operating budget manager. He expressed some concerns about social impact bonds, in particular. I would like to know your opinion on those bonds.

His argument was basically that these bonds will increase the costs that the government will have to assume because they add an intermediary between the government and the service provider. He argued that once the interest rate for these bonds is set, there is no limit to the amount that these interest rates can generate. In a capital market, the interest rate is tied to the risk of the activity. That's the case for any kind of bond. Mr. Juppe said that it's a type of loan where the government pays the interest if the program works.

Doesn't the fact that there is also an intermediary with social impact bonds mean that there's a risk that the government would spend more than if it paid the service provider directly? What are your thoughts?

[James Mulvale]

Yes, I do believe that risk.... It's simple in one sense. We're funding services here where there's an extra layer that has to be realized back to the investor as profit. As I understand it, at least in some models, when social investment bonds are set up and money is put up to invest in these instruments, the investors are guaranteed recovery of their principal, or even recovery of some modest amount of interest, return on investment.

The question we ask ourselves at CASW is that if we're going to be setting up these instruments to attract funding and go through all these rather complex accountability mechanisms and transfer mechanisms, is it not better to take a public finance model to draw upon what we know from research, or maybe do additional research on approaches that work—I mentioned earlier the research that's ongoing on evidence-based approaches in mental health and addictions, and services for children and families—do the research and draw on existing research to invest in ways that we know are going to potentially be the most effective, and take the profit incentive out of it so that money goes to the people who need the services or need the support? I don't know what the answer to this question is.

I worry, too, that if we're setting up rather complex oversight mechanisms for social investment bonds, are there some fairly high administrative costs here? If we can find approaches that work in the public sector and that are potentially transferrable across all parts of the country, would we not be better to champion these approaches in ways that not-for-profits can just get in and do their work and not have to be paying anybody any returns on investments?

One example of this right now is that we have good evidence about the utility of the housing first model in mental health, and we've seen not-for-profits all across the country get onto that and develop local programs. Why do we need to introduce a profit motive to it?

[Tarik Brahmi, NDP, Saint-Jean, QC]

He also argued that the savings we are speaking about in the case of these bonds are for the most part overestimated. In his opinion, what will be considered is that the number of cases processed by the service providers will decrease. But that won't necessarily be the case.

[James Mulvale]

I'm not sure of specific research in that regard, but just thinking about it rationally, I think if public resources can be mustered to invest public dollars towards public good without, once again, having to pay investors, so to speak, that would seem a more logical approach.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Mr. Butt.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

I guess it's a bit of a coincidence that Professor Mulvale just mentioned the housing first program, with which I've had a tremendous amount of experience, both in my life prior to being elected as a member of Parliament and being very involved in the program At Home/Chez Soi, through the Mental Health Commission of Canada, in Toronto. I actually think that's an excellent model and an excellent example of how social enterprise can work.

There is a component of that, you could argue, where someone makes a bit of a profit, and obviously that's the owner of the apartment building. He's providing an apartment unit at a market rent. The rent is subsidized through a government program. The clients who participated in the At Home/Chez Soi program were actually selected through a research project done through St. Michael's Hospital in Toronto, and social workers were very much involved as partners in that very successful program.

When I think of a social enterprise model, that's what I think of. There might be one or two partners who might make a little bit of money out of it, but it is the outcomes that are important here. We housed 300 people with severe mental illness issues in permanent, solid housing, and in most cases we turned those people's lives around. That is a successful social enterprise model.

I want to ask Professor Mulvale, would you not agree that this is exactly the kind of model we're talking about here? We're not talking about social enterprise or social finance taking over public health care or public community support services that are being publicly funded and administered. We're talking about trying to do things a little bit better, and encourage collaboration and cooperation among a whole bunch of agencies.

I remember when we had the first meeting. There were groups that sat there in Toronto City Hall—I'll never forget the meeting—when I was running the apartment association. Organizations were there that had never spoken to each other ever, because they all worked in silos until this project was launched by the Mental Health Commission of Canada. It actually brought those people to the table to ask whether there was a better way to help people with mental illness who are homeless, turn their lives around, get the medication and support they need, and make sure they have a roof over their head.

Would you not agree, Professor, that that's an excellent example of the kind of thing we should be supporting as the Government of Canada?

[James Mulvale]

I'm not sure who I'm speaking to. I can't see anybody's name tag, so I can't address you by name.

There's a distinction I would draw there. The distinction I would make is that social housing organizations have worked with the private sector for decades, in terms of building units. I mean, there's nothing essentially new about that.

Our worry at the CASW is introducing the profit motive into service delivery. Once the housing is built and the folks are in there, with mental health and our focus on the recovery model, we're looking at support for people with mental health problems as a long-term and lifelong project, as you'll know. This is something where we have to make a long-term commitment, in terms of adequately financing public services through public dollars.

In terms of providing housing or starting up a business that might employ people and needs to turn a profit and reinvest the profit, and continuing to provide them with a good job that accommodates their disability, we're open to those kinds of things. It's simply the essential service provision and the core support that people need is where we worry about introducing the profit motive.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

I was thrilled that I was a member of the special committee that looked into cooperatives in Canada. There's another example that I use. I think it's a very similar model. The reason that social enterprise is created in communities is the same reason that cooperatives were created in communities: there was a need that was identified by a group of people.

Maybe I'll get Lars or Justin talk about this. Do you see that similarity in the co-op model and social enterprise model? Really, communities are reacting to needs they have that are not necessarily delivered by direct government services. They've recognized a need, a neat idea, a collaborative, something they can do to make their communities better places. Is that not the kind of thing you're directly involved in?

I'm probably done, right?

[The Chair, Conservative, Phil McColeman]

I'll allow the answer.